Walmart has sued Visa in New York Supreme Court on Tuesday for allowing customers to verify chip-enabled debit card transactions with a signature instead of a PIN. Visa's business policy allows people to put signatures at the register which is more vulnerable to fraud. The chain of hypermarkets also accuses the payment processor for designing strategy aimed to grab higher fees on debit purchases.

Signature authorized in-store payments are allegedly routed through Visa's debit network for which the credit card company charges higher fees. The discount grocery stores also claim that 91% of the fraudulent debit card purchases are conducted through signature authentication module, reports CNN Money.

Merchants and card issuers in The US have been offered an October 2015 deadline to transform into chip-based EMV standard by Visa, Mastercard and other card networks. The payment processors intend to replace the magnetic stripe cards with more secure chip-based cards.

Walmart has adopted the transformation early last year while representing itself as one of the first national retailers to buy new terminals accepting EMV cards (named comprising of the initials from Easypay, Mastercard and VISA). After completion of the Walmart's transition, the payment processors have decided allowing signature authorization without requiring PIN confirmation in the US.

Minimization confusion among consumers facing trouble in adapting new standard has been cited as the reason for such strategy. However, signature authorization module simply fails in preventing fraud against physically stolen cards, argues the retailing giant in Tuesday's lawsuit, according to a report published in Ars Technicaa.

PIN has been acknowledged as the most secured mean for verification of cardholder in the marketplace in recent days while offering superior security to the consumers. Visa itself acknowledges the measure as the most secured mean in many other countries. However, it allows the fraud prone signature authentication module in the US eyeing more earning through processing those transactions, reports USA Today quoting Randy Hargrove, a spokesperson for Walmart.

Around 70% of the Walmart's all card purchases are conducted through debit cards. Though a PIN is required to purchase using chip based debit cards, but credit cards don't require a PIN. Other countries transformed into chip based module authenticate consumers using PIN codes while making a card purchase. Mike Cook, assistant treasurer for Walmart considers using chips without PINs as a serious joke.

Following a deadline set by a network of payment processors, Walmart has transformed into more secured chip based cards. After their transformation, VISA has started allowing signature authentication bypassing PIN verification. Walmart has sued the global payment processor pointing its profit mongering attitude while exposing consumers to higher risks of fraud.